Prescott, Inc., manufacturesbookcases and uses an activity-b

Prescott, Inc., manufacturesbookcases and uses an activity-based costing system. Prescott’s activityareas and related data follows:           ActivityBudgeted Costof ActivityAllocation BaseCost AllocationRate      Materials handling$230,000Number of parts$0.50       Assembly3,200,000Direct labor hours16.00       Finishing180,000Number of finished units4.50                  Prescott producedtwo styles of bookcases in October: the standard bookcase and an unfinishedbookcase, which has fewer parts and requires no finishing. The totals forquantities, direct materials costs, and other data follow:     ProductTotal UnitsProducedTotal DirectMaterials CostsTotal DirectLabor CostsTotal Numberof PartsTotal AssemblingDirect Labor Hours    Standard bookcase3,000$36,000$45,0009,0004,500    Unfinished bookcase3,50035,00035,0007,0003,500                Requirements:          1. Compute the manufacturing product cost per unitof each type of bookcase.2. Suppose thatpre-manufacturing activities, such as product design, were assigned to thestandard bookcases at $7 each, and to the unfinished bookcases at $2 each.Similar analyses were conducted of post-manufacturing activities such as distribution,marketing, and customer service. The post-manufacturing costs were $22 perstandard bookcase and $14 per unfinished bookcase. Compute the full product costs per unit.3. Which product costs are reported in the externalfinancial statements? Which costs are used for management decision making?Explain the difference.4. What price should Prescott’s managers set forunfinished bookcases to earn $15 per bookcase?

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